Ch13-1

Chapter 13Chapter 13

Corporate Entrepreneurshipand Innovation

Corporate Entrepreneurshipand Innovation

Michael A. HittR. Duane Ireland

Robert E. Hoskisson

Michael A. HittR. Duane Ireland

Robert E. Hoskisson

©2000 South-Western College Publishing©2000 South-Western College Publishing

Ch13-2

CompetitivenessCompetitiveness

Chapter 3Chapter 3InternalInternal

EnvironmentEnvironment

Chapter 2Chapter 2ExternalExternal

EnvironmentEnvironmentThe StrategicManagement

Process

Strategic IntentStrategic Intent

Strategic MissionStrategic Mission

StrategicStrategicCompetitivenessCompetitivenessAbove AverageAbove Average

ReturnsReturnsFeedback

Strategy FormulationStrategy Formulation

Chapter 4Chapter 4Business-LevelBusiness-Level

StrategyStrategy

Chapter 5Chapter 5CompetitiveCompetitiveDynamicsDynamics

Chapter 6Chapter 6Corporate-LevelCorporate-Level

StrategyStrategy

Chapter 8Chapter 8InternationalInternational

StrategyStrategy

Chapter 9Chapter 9CooperativeCooperative

StrategiesStrategies

Chapter 7Chapter 7Acquisitions &Acquisitions &RestructuringRestructuring

Strategy ImplementationStrategy Implementation

Chapter 10Chapter 10CorporateCorporate

GovernanceGovernance

Chapter 11Chapter 11StructureStructure& Control& Control

Chapter 12Chapter 12StrategicStrategic

LeadershipLeadership

Chapter 13Chapter 13Entrepreneurship & InnovationEntrepreneurship & Innovation

Str

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Str

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Str

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Ch13-3

Defining EntrepreneurshipDefining Entrepreneurship

Firm’s capabilities to develop new goods or Firm’s capabilities to develop new goods or services and manage the innovation processservices and manage the innovation process

Corporate EntrepreneurshipCorporate Entrepreneurship

Creating or developing a new product or process ideaCreating or developing a new product or process ideaInventionInvention

Creating a commercializable product from inventionCreating a commercializable product from inventionInnovationInnovation

Adoption of innovation by a population of similar firmsAdoption of innovation by a population of similar firmsImitationImitation

Ch13-4

Successful EntrepreneurshipSuccessful Entrepreneurship

The key to success with entrepreneurship and The key to success with entrepreneurship and innovation is moving from the invention of ideas innovation is moving from the invention of ideas to effective commercialization and acceptance in to effective commercialization and acceptance in the marketplacethe marketplace

Ch13-5

TimelyTimelyTimelyTimely

Difficult forDifficult forcompetitors to imitatecompetitors to imitate

Difficult forDifficult forcompetitors to imitatecompetitors to imitate

Commercially exploitableCommercially exploitablewith present capabilitieswith present capabilities

Commercially exploitableCommercially exploitablewith present capabilitieswith present capabilities

Innovation and Competitive AdvantageInnovation and Competitive Advantage

CompetitiveCompetitiveAdvantageAdvantage

CompetitiveCompetitiveAdvantageAdvantage

Provides significantProvides significantvalue to customers value to customers Provides significantProvides significantvalue to customers value to customers

Ch13-6

Fostering Entrepreneurial InnovationFostering Entrepreneurial Innovation

Internal Corporate VenturingInternal Corporate Venturing

Three approaches:Three approaches:

Cooperating to Produce InnovationCooperating to Produce Innovation

Acquiring Innovative CapabilityAcquiring Innovative Capability

Create it!Create it!

Co-opt it!Co-opt it!

Buy it!Buy it!

Ch13-7

Internal Corporate VenturingInternal Corporate Venturing

Corporate Corporate IntrapreneurshipIntrapreneurship can occur as either a can occur as either a bottom-up process or as a top-down processbottom-up process or as a top-down process

Autonomous strategic behavior is a bottom-up process Autonomous strategic behavior is a bottom-up process through which Product Champions pursue new product through which Product Champions pursue new product ideas to commercializationideas to commercialization

Product Champions are individuals who have an Product Champions are individuals who have an entrepreneurial vision for a new product and seek entrepreneurial vision for a new product and seek support for its commercializationsupport for its commercialization

Ch13-8

Structural ContextStructural Context

InducedInducedStrategic Strategic BehaviorBehavior

Model of Internal Corporate VenturingModel of Internal Corporate Venturing

Concept of Corporate StrategyConcept of Corporate Strategy

AutonomousAutonomousStrategic Strategic BehaviorBehavior

Strategic ContextStrategic Context

Ch13-9

Internal Corporate VenturingInternal Corporate Venturing

Induced strategic behavior is a top-down process Induced strategic behavior is a top-down process in which the current strategy and structure foster in which the current strategy and structure foster product innovations that are closely associated product innovations that are closely associated with the current strategywith the current strategy

Environmental uncertainty makes developing Environmental uncertainty makes developing entrepreneurship strategy highly complexentrepreneurship strategy highly complex

Requires a decision on which corporate resources Requires a decision on which corporate resources to deploy for new technology development and to deploy for new technology development and which innovative ideas to bring to marketwhich innovative ideas to bring to market

Ch13-10

Value Value Appropriation Appropriation

from from InnovationInnovation

Barriers to IntegrationBarriers to Integration

Different TimeDifferent Time

InterpersonalInterpersonal

Different GoalDifferent Goal

Formality ofFormality of

OrientationOrientation

OrientationOrientation

OrientatioOrientationn

StructureStructure

Facilitators of Facilitators of IntegrationIntegration

Shared ValuesShared Values

Leaders’ VisionLeaders’ Vision

EffectiveEffective

Budget AllocationBudget Allocation

CommunicationCommunication

Appropriating Value from InnovationAppropriating Value from Innovation

Cross-Cross-Functional Functional

Integration/Integration/Design TeamsDesign Teams

Time to Time to MarketMarket

Product Product QualityQuality

Creation of Creation of Customer Customer

ValueValue

Ch13-11

Cooperating to Produce InnovationCooperating to Produce Innovation

Strategic alliances can help to foster innovation by Strategic alliances can help to foster innovation by combining the knowledge and resources of two or combining the knowledge and resources of two or more partnersmore partners

Firms must focus on building knowledge, identifying Firms must focus on building knowledge, identifying core competencies and developing strong human core competencies and developing strong human resources to manage these projectsresources to manage these projects

Firms can also give away their core competencies by Firms can also give away their core competencies by outsourcing to alliance partners rather than developing outsourcing to alliance partners rather than developing their own capabilities over timetheir own capabilities over time

Ch13-12

Acquiring Innovative CapabilityAcquiring Innovative Capability

Many firms now use acquisitions of other firms as Many firms now use acquisitions of other firms as a substitute for developing innovations internallya substitute for developing innovations internally

This can reduce risk and lower costly R&D This can reduce risk and lower costly R&D investmentsinvestments

The drawback is that firms can eventually lose The drawback is that firms can eventually lose their ability to generate innovations internallytheir ability to generate innovations internally

Ch13-13

Small Firms and InnovationSmall Firms and Innovation

Small firms created most of the new jobs in the U.S. Small firms created most of the new jobs in the U.S. in the 1990s in the 1990s and this will continue in the 21st century

While large firms account for over 80% of the world’s While large firms account for over 80% of the world’s R&D spending, individuals or small firms are granted R&D spending, individuals or small firms are granted more than half of U.S. patentsmore than half of U.S. patents

Many small firms are created when employees leave Many small firms are created when employees leave large firms to start their own businesses, frequently large firms to start their own businesses, frequently continuing to interact with their former firms to develop continuing to interact with their former firms to develop innovations and new productsinnovations and new products